FIRST DIVISION

[G.R. No. 112940. November 21, 1994.]

DAI-CHI ELECTRONICS MANUFACTURING CORPORATION ,

petitioner, vs. HON. MARTIN S. VILLARAMA, JR., Presiding
Judge, Regional Trial Court, Branch 156, Pasig, Metro
Manila and ADONIS C. LIMJUCO, respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL ACTIONS; WHERE CAUSE OF ACTION

REFERS TO BREACH OF CONTRACTUAL OBLIGATION ON POST-EMPLOYMENT
RELATIONS OF THE PARTIES, JURISDICTION BELONGS TO REGULAR COURTS.
— Petitioner does not ask for any relief under the Labor Code of the
Philippines. It seeks to recover damages agreed upon in the contract as
redress for private respondent's breach of his contractual obligation to its
"damage and prejudice". Such cause of action is within the realm of Civil
Law, and jurisdiction over the controversy belongs to the regular courts.
More so when we consider that the stipulation refers to the post-employment
relations of the parties.
2. LABOR AND SOCIAL LEGISLATION; LABOR CODE; CLAIMS FOR
DAMAGES MUST HAVE A REASONABLE CAUSAL CONNECTION WITH ANY OF
THE CLAIMS PROVIDED FOR IN ARTICLE 217. — Jurisprudence has evolved
the rule that claims for damages under paragraph 4 of Article 217, to be
cognizable by the Labor Arbiter, must have a reasonable causal connection
with any of the claims provided for in that article. Only if there is such a
connection with the other claims can the claim for damages be considered
as arising from employer-employee relations.
3. ID.; ID.; ID.; RATIONALE. — The rationale behind the holdings in
San Miguel Corporation v. NLRC, 161 SCRA 719 (1988) and in Pepsi-Cola
Distributors of the Phil., Inc. v. Gallang, 201 SCRA 695 (1991) is that the
complaint for damages was anchored not on the termination of the
employee's services per se, but rather on the manner and consequent
effects of such termination.
4. REMEDIAL LAW; CIVIL ACTIONS; FORUM SHOPPING; NEGATED
WHERE PARTY DISCLOSED A PENDING LABOR CASE BETWEEN THEM AND
SET UP ITS COUNTERCLAIM FOR LIQUIDATED DAMAGES MERELY AS A
DEFENSE. — Private respondent also raises the issue of forum shopping. He
asserts that the petition should be dismissed pursuant to Circular No. 28-91
because petitioner merely "mentioned in passing a labor case between
petitioner and private respondent which is being handled by petitioner's
other counsel". Private respondent is referring to NLRC NCR Case No. 00-11-
0689493 filed by him on November 8, 1993. Petitioner asserts that the case
before the Labor Arbiter was filed by private respondent against petitioner
for alleged illegal dismissal, underpayment of wages and non-payment of
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
 overtime and premium pay with prayer for moral and exemplary damages,
to which petitioner, through its other counsel, "logically raised as one of its
several counterclaims against private respondent the liquidated damages
mentioned in the contract of employment between the parties." Petitioner
did not fail to disclose the pending labor case in the certification required
under Circular No. 28-91. Thus, petitioner cannot be considered to have
submitted a false certification warranting summary dismissal of the petition
(Par. 3[a] of Circular No. 28-91). Petitioner did not commit forum shopping. It
set up its counterclaim for liquidated damages merely as a defense against
private respondent's complaint before the Labor Arbiter.

DECISION

QUIASON, J : p

This is a petition for review on certiorari under Rule 45 of the Revised

Rules of Court in relation to R.A. No. 5440 and Circular No. 2-90 of the
following orders of the Regional Trial Court, Branch 156, Pasig, Metro Manila,
in Civil Case No. 63448: 1) Order dated September 20, 1993, dismissing the
complaint of petitioner on the ground of lack of jurisdiction over the subject
matter of the controversy; and 2) Order dated November 29, 1993, denying
petitioner's motion for reconsideration.
I
On July 29, 1993, petitioner filed a complaint for damages with the
Regional Trial Court, Branch 156, Pasig, Metro Manila, against private
respondent, a former employee. llcd

Petitioner alleged that private respondent violated paragraph five of

their Contract of Employment dated August 27, 1990, which provides:
"That for a period of two (2) years after termination of service
from EMPLOYER, EMPLOYEE shall not in any manner be connected,
and/or employed, be a consultant and/or be an informative body
directly or indirectly, with any business firm, entity or undertaking
engaged in a business similar to or in competition with that of the
EMPLOYER" (Rollo, p. 24).

Petitioner claimed that private respondent became an employee of

Angel Sound Philippines Corporation, a corporation engaged in the same line
of business as that of petitioner, within two years from January 30, 1992, the
date of private respondent's resignation from petitioner's employ. Petitioner
further alleged that private respondent is holding the position of Head of the
Material Management Control Department, the same position he held while
in the employ of petitioner. prcd

Petitioner sought to recover liquidated damages in the amount of One

Hundred Thousand Pesos (P100,000.00), as provided for in paragraph seven
of the contract, which provides:

CD Technologies Asia, Inc. © 2021 cdasiaonline.com

 "That a violation of the conditions set forth in provisions Nos. (2)
and (5) of this contract shall entitle the EMPLOYER to collect from the
EMPLOYEE the sum of ONE HUNDRED THOUSAND PESOS (P100,000.00)
by way of liquidated damages and likewise to adopt appropriate legal
measures to prevent the EMPLOYEE from accepting employment and/or
engaging, directly or indirectly, in a business similar to or in
competition with that of the EMPLOYER, before the lapse of the
aforesaid period of TWO (2) YEARS from date of termination of service
from EMPLOYER" (Rollo, p. 25).

Respondent court, in its Order dated September 20, 1993, ruled that it
had no jurisdiction over the subject matter of the controversy because the
complaint was for damages arising from employer-employee relations. Citing
Article 217(4) of the Labor Code of the Philippines, as amended by R.A. No.
6715, respondent court stated that it is the Labor Arbiter which had original
and exclusive jurisdiction over the subject matter of the case (Rollo, pp. 28-
32).
In this petition, petitioner asks for the reversal of respondent court's
dismissal of the civil case, contending that the case is cognizable by the
regular courts. It argues that the cause of action did not arise from
employer-employee relations, even though the claim is based on a provision
in the employment contract. LLpr

II
This issue is: Is petitioner's claim for damages one arising from
employer-employee relations?
We answer in the negative.
Article 217, as amended by Section 9 of R.A. No. 6715, provides as
follows:
"Jurisdiction of Labor Arbiters and the Commission. — (a) Except
as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes,
the following cases involving all workers, whether agricultural or non-
agricultural:
xxx xxx xxx

4. Claims for actual, moral, exemplary and other forms of

damages arising from the employer-employee relations ;" (Emphasis
supplied)
xxx xxx xxx
Petitioner does not ask for any relief under the Labor Code of the
Philippines. It seeks to recover damages agreed upon in the contract as
redress for private respondent's breach of his contractual obligation to its
"damage and prejudice" (Rollo, p. 57). Such cause of action is within the
realm of Civil Law, and jurisdiction over the controversy belongs to the
regular courts. More so when we consider that the stipulation refers to the
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
 post-employment relations of the parties.
A case in point is Singapore Airlines Limited v. Paño, 122 SCRA 671
(1983), which also dealt with the employee's breach of an obligation
embodied in a written employment agreement. Singapore Airlines filed a
complaint in the trial court for damages against its employee for "wanton
failure and refusal" without just cause to report to duty and for having
"maliciously and with bad faith" violated the terms and conditions of its
"Agreement for a Course of Conversion Training at the Expense of Singapore
Airlines Limited." This agreement provided that the employee shall agree to
remain in the service of the employer for a period of five years from the date
of the commencement of the training program. The trial court dismissed the
complaint on the grounds that it did not have jurisdiction over the subject
matter of the controversy.
On appeal to this court, we held that jurisdiction over the controversy
belongs to the civil courts. We stated that the action was for breach of a
contractual obligation, which is intrinsically a civil dispute. We further stated
that while seemingly the cause of action arose from employer-employee
relations, the employer's claim for damages is grounded on "wanton failure
and refusal" without just cause to report to duty coupled with the averment
that the employee "maliciously and with bad faith" violated the terms and
conditions of the contract to the damage of the employer. Such averments
removed the controversy from the coverage of the Labor Code of the
Philippines and brought it within the purview of Civil Law.
Jurisprudence has evolved the rule that claims for damages under
paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have
a reasonable causal connection with any of the claims provided for in that
article. Only if there is such a connection with the other claims can the claim
for damages be considered as arising from employer-employee relations. prcd

In San Miguel Corporation v. National Labor Relations Commission, 161

SCRA 719 (1988), we had occasion to construe Article 217, as amended by
B.P. Blg. 227. Article 217 then provided that the Labor Arbiter had
jurisdiction over all money claims of workers, but the phrase "arising from
employer-employee relation" was deleted. We ruled thus:
"While paragraph 3 above refers to 'all money claims of workers,'
it is not necessary to suppose that the entire universe of money claims
that might be asserted by workers against their employers has been
absorbed into the original and exclusive jurisdiction of Labor Arbiters.
In the first place, paragraph 3 should be read not in isolation from but
rather within the context formed by paragraph 1 (relating to unfair
labor practices), paragraph 2 (relating to claims concerning terms and
conditions of employment), paragraph 4 (claims relating to household
services, a particular species of employer-employee relations), and
paragraph 5 (relating to certain activities prohibited to employees or to
employers). It is evident that there is a unifying element which runs
through paragraphs 1 to 5 and that is, that they all refer to cases or
disputes arising out of or in connection with an employer-employee
relationship. This is, in other words, a situation where the rule of
noscitur a sociis may be usefully invoked in clarifying the scope of
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
 paragraph 3, and any other paragraph of Article 217 of the Labor Code,
as amended. We reach the above conclusion from an examination of
the terms themselves of Article 217, as last amended by B.P Blg. 227,
and even though earlier versions of Article 217 of the Labor Code
expressly brought within the jurisdiction of the Labor Arbiters and the
NLRC 'cases arising from employer-employee relations,' which clause
was not expressly carried over, in printer's ink, in Article 217 as it
exists today. For it cannot be presumed that money claims of workers
which do not arise out of or in connection with their employer-
employee relationship, and which would therefore fall within the
general jurisdiction of regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts
and lodged with Labor Arbiters on an exclusive basis. The Court,
therefore, believes and so holds that the 'money claims of workers'
referred to in paragraph 3 of Article 217 embraces money claims which
arise out of or in connection with the employer-employee relationship
or some aspect or incident of some relationship. Put a little differently,
that money claims of workers which now fall within the original and
exclusive jurisdiction of Labor Arbiters are those money claims which
have some reasonable causal connection with the employer-employee
relationship" (Emphasis supplied).

San Miguel was cited in Ocheda v. Court of Appeals, 214 SCRA 629
(1992), where we held that when the cause of action is based on a quasi-
delict or tort, which has no reasonable causal connection with any of the
claims provided for in Article 217, jurisdiction over the action is with the
regular courts.
We also applied the "reasonable causal connection rule" in Pepsi-Cola
Distributors of the Philippines, Inc. v. Gallang , 201 SCRA 695 (1991), where
we held that an action filed by employees against an employer for damages
for the latter's malicious filing of a criminal complaint for falsification of
private documents against them came under the jurisdiction of the regular
courts (See also Honiron Philippines, Inc. v. Intermediate Appellate Court,
G.R. No. 66929, August 13, 1990 and Abejaron v. Court of Appeals, 208
SCRA 899 [1992]).
The rationale behind the holdings in these cases is that the complaint
for damages was anchored not on the termination of the employee's
services per se, but rather on the manner and consequent effects of such
termination.
Cases decided under earlier versions of Article 217 were consistent
also in that intrinsically civil disputes, even if these involve an employer and
his employee, are cognizable by the regular courts. In Medina vs. Castro-
Bartolome, 116 SCRA 597 (1982), a civil complaint for damages against the
employer for slanderous remarks made against them, we upheld the regular
court's jurisdiction after finding that the plaintiffs did not allege any unfair
labor practice, their complaint being a simple action for damages for tortious
acts allegedly committed by the defendants. In Molave Sales, Inc. v. Laron,
129 SCRA 485 (1984), we held that the claim of the plaintiff against its sales
manager for payment of certain accounts and cash advances was properly
cognizable by the regular courts because "although a controversy is between
CD Technologies Asia, Inc. © 2021 cdasiaonline.com
 an employer and an employee, the Labor Arbiters have no jurisdiction if the
Labor Code is not involved." prLL

Private respondent also raises the issue of forum shopping. He asserts

that the petition should be dismissed pursuant to Circular No. 28-91 because
petitioner merely "mentioned in passing a labor case between petitioner and
private respondent which is being handled by petitioner's other counsel"
(Rollo, p. 42). Private respondent is referring to NLRC NCR Case No. 00-11-
0689493 filed by him on November 8, 1993.
Petitioner asserts that the case before the Labor Arbiter was filed by
private respondent against petitioner for alleged illegal dismissal,
underpayment of wages and non-payment of overtime and premium pay
with prayer for moral and exemplary damages, to which petitioner, through
its other counsel, "logically raised as one of its several counterclaims against
private respondent the liquidated damages mentioned in the contract of
employment between the parties" (Rollo, p. 69).
Petitioner did not fail to disclose the pending labor case in the
certification required under Circular No. 28-91. Thus, petitioner cannot be
considered to have submitted a false certification warranting summary
dismissal of the petition (par. 3[a] of Circular No. 28-91).
Petitioner did not commit forum shopping. It set up its counterclaim for
liquidated damages merely as a defense against private respondent's
complaint before the Labor Arbiter. llcd

ACCORDINGLY, the Orders of the Regional Trial Court dated September

20, 1993 and November 29, 1993 are SET ASIDE. The trial court is ORDERED
to continue with the proceedings in Civil Case No. 63448.
SO ORDERED.
Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

CD Technologies Asia, Inc. © 2021 cdasiaonline.com